1 Standard Wholesale Power Contracts Progress 2000 Christopher J. Bernard General Counsel Entergy...

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Standard Standard Wholesale Power Wholesale Power

ContractsContractsProgress 2000Progress 2000

Christopher J. BernardChristopher J. BernardGeneral CounselGeneral Counsel

Entergy Power Marketing CorpEntergy Power Marketing Corp

Co-Chair NEM CommitteeCo-Chair NEM Committee

Working Group EEIWorking Group EEI

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WHAT WE HADWHAT WE HAD

UTILITY INTERCHANGE AGREEMENTSUTILITY INTERCHANGE AGREEMENTS TARIFFSTARIFFS ““POWER GAS” TRADING POWER GAS” TRADING

AGREEMENTSAGREEMENTS CONFIRMATION SHEETSCONFIRMATION SHEETS BABY ISDAsBABY ISDAs NO CREDIT - NO PROBLEMNO CREDIT - NO PROBLEM

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1998 WAKE UP CALL !!!!1998 WAKE UP CALL !!!!

POWER COMPANY OF AMERICAPOWER COMPANY OF AMERICA FEDERAL ENERGYFEDERAL ENERGY CITY OF SPRINGFIELDCITY OF SPRINGFIELD $10,000 MEGAWATT HOURS$10,000 MEGAWATT HOURS

– 40X EXPOSURE IN 2 DAYS40X EXPOSURE IN 2 DAYS

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WHAT WAS MISSING ?WHAT WAS MISSING ?

COUNTERPARTY COUNTERPARTY CREDITWORTHINESSCREDITWORTHINESS

BILLING, PAYMENT, NETTINGBILLING, PAYMENT, NETTING DEFAULT TRIGGERS AND DEFAULT TRIGGERS AND

REMEDIESREMEDIES BANKRUPTCY BANKRUPTCY

– SETOFF, FORWARD CONTRACT SETOFF, FORWARD CONTRACT LANGUAGE, NETTINGLANGUAGE, NETTING

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CONTRACT PROTECTIONSCONTRACT PROTECTIONS1999 REACTION1999 REACTION

““BANDAIDS” BANDAIDS” COMPREHENSIVE ”NETTING AGREEMENTS”COMPREHENSIVE ”NETTING AGREEMENTS” INCLUDED TERMS BORROWED FROM INCLUDED TERMS BORROWED FROM

NATURAL GAS INDUSTRY & ISDANATURAL GAS INDUSTRY & ISDA AGGRESSIVE PUSH TO EXECUTE THESE AGGRESSIVE PUSH TO EXECUTE THESE

“AMENDMENTS”“AMENDMENTS”

STANDARDIZED CONTRACTS STANDARDIZED CONTRACTS MOVEMENTMOVEMENT

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““STANDARD” FORMSSTANDARD” FORMS

WSPPWSPP– PHYSICAL NOT FINANCIALPHYSICAL NOT FINANCIAL– DOMESTIC & GEOGRAPHICALDOMESTIC & GEOGRAPHICAL

ERCOTERCOT– PHYSICALPHYSICAL– GEOGRAPHICALLY LIMITEDGEOGRAPHICALLY LIMITED

EEI/NEMEEI/NEM– PHYSICAL & FINANCIALPHYSICAL & FINANCIAL– DOMESTICDOMESTIC

ISDAISDA– FINANCIAL NOT PHYSICALFINANCIAL NOT PHYSICAL– DOMESTIC & INTERNATIONALDOMESTIC & INTERNATIONAL

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STANDARDIZED STANDARDIZED CONTRACT EFFORTSCONTRACT EFFORTS

– EEI/NEMEEI/NEM NATIONAL ENERGY MARKETERS NATIONAL ENERGY MARKETERS ASSOC.ASSOC.

EDISON ELECTRIC INSTITUTEEDISON ELECTRIC INSTITUTE– WSPPWSPP

MORE MARKET DRIVEN PROVISIONSMORE MARKET DRIVEN PROVISIONS– ERCOTERCOT

ELECTRIC RELIABILITY COUNCIL OF ELECTRIC RELIABILITY COUNCIL OF TEXASTEXAS

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WHAT ARE WE TRYING TO WHAT ARE WE TRYING TO ADDRESS ?ADDRESS ?

CREDIT ASSURANCESCREDIT ASSURANCES COLLATERALCOLLATERAL DEFAULTS & REMEDIESDEFAULTS & REMEDIES BANKRUPTCYBANKRUPTCY MUNICIPAL AUTHORITYMUNICIPAL AUTHORITY

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– MAJOR PARTICIPANTSMAJOR PARTICIPANTS 50 COMPANIES THROUGH NEM50 COMPANIES THROUGH NEM 30- 45 COMPANIES THROUGH EEI30- 45 COMPANIES THROUGH EEI ENRON, NYMEX & OTHERSENRON, NYMEX & OTHERS

– STRENGTHENED RELATIONSHIPS STRENGTHENED RELATIONSHIPS THROUGHOUT THE INDUSTRYTHROUGHOUT THE INDUSTRY

– CROSS POLLINATION OF INDUSTRY CROSS POLLINATION OF INDUSTRY TALENTTALENT

– DEFINITIONS & STANDARDIZED DEFINITIONS & STANDARDIZED LANGUAGELANGUAGE

STANDARDIZED STANDARDIZED CONTRACT EFFORTSCONTRACT EFFORTS

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CONTRACT REFERENCECONTRACT REFERENCE GENERAL AND CONTRACT INFORMATIONGENERAL AND CONTRACT INFORMATION

– NATIONAL ENERGY MARKETERS NATIONAL ENERGY MARKETERS WWW.ENERGYMARKETERS.COMWWW.ENERGYMARKETERS.COM

– EDISON ELECTRIC INSTITUTEEDISON ELECTRIC INSTITUTE WWW.EEI.ORGWWW.EEI.ORG

– WESTERN SYSTEM POWER POOLWESTERN SYSTEM POWER POOL WWW.WSPP.ORGWWW.WSPP.ORG

– ELECTRIC RELIABILITY COUNCIL OF TEXASELECTRIC RELIABILITY COUNCIL OF TEXAS WWW.ERCOT.COMWWW.ERCOT.COM

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CURRENT ISSUES TO CURRENT ISSUES TO WATCHWATCH

REVISIONS IN GAS CONTRACTSREVISIONS IN GAS CONTRACTS CROSS COMMODITY AGREEMENTSCROSS COMMODITY AGREEMENTS E-TRADING AGREEMENTSE-TRADING AGREEMENTS INCREASED DEMAND FOR CREDIT INCREASED DEMAND FOR CREDIT

ASSURANCE DOCUMENTATIONASSURANCE DOCUMENTATION NETTING AGREEMENTSNETTING AGREEMENTS CROSS COMMODITY NETTINGCROSS COMMODITY NETTING PARENTAL GUARANTEESPARENTAL GUARANTEES CREATIVE CREDIT ASSURANCE ARRANGEMENTSCREATIVE CREDIT ASSURANCE ARRANGEMENTS

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Standard Standard Wholesale Power Wholesale Power

ContractsContractsProgress 2000Progress 2000

Christopher J. BernardChristopher J. BernardGeneral CounselGeneral Counsel

Entergy Power Marketing CorpEntergy Power Marketing Corp

Co-Chair NEM CommitteeCo-Chair NEM Committee

Working Group EEIWorking Group EEI

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